Thursday, November 15, 2007

Novastar Financial: That's a bargain!

NovaStar Financial Inc. shares lost more than half their value Thursday after the company reported losing almost $600 million in its third quarter and raised the specter of going bankrupt.

Shares of the Kansas City-based mortgage lender were down $2.51, or nearly 55 percent, to $2.08 Thursday. They traded at more than $105 at the beginning of the year.

Yes, they were cut in half on Thursday but the stock was over $250/share just a few years ago. But wait, is Novastar a bargain? It could be. After all the dividend yield is close to 500%. I wonder if that dividend is safe?